Recession

Tyler Durden's picture

"Is College Worth It?" - Here Is The Fed's Answer In One Chart





The topic of whether college is worth it (costs vs benefits) has been discussed at length (here, here, and here most recently) but no lesser entity than the San Francisco Fed's PhDs have crunched the numbers and found that in the new normal, median starting wages of recent college graduates have not kept pace with median earnings for all workers. Furthermore, they are not optimistic - "because college grads face wages and hiring conditions that are especially responsive to business cycle conditions, this low earnings growth, together with shifts in the distribution of graduates’ labor market status, suggests continued weakness in the overall economy."

 
Tyler Durden's picture

"Authenticity Is As Rare As A Unicorn In Today's Politically-Motivated Markets"





In the Golden Age of the Central Banker it is impossible to distinguish fundamental economic reasons for asset class price movements from politically-driven strategic reasons. When words are used for strategic effect rather than a genuine transmission of information you create a virtual stalking horse. It’s a focus on how something is said as opposed to what is described. It’s a focus on form rather than content, on truthiness rather than truth. It’s why authenticity is as rare as a unicorn in the public world today.

 
Tyler Durden's picture

Portugal President Admits Espirito Santo Failure Could Be Systemic As Another HoldCo Goes Bankrupt





As RioForte joins its parent ESI in bankruptcy, in a strangely honest turn of events from a European leader, Portugal's President Anibal Cavaco Silva warned on Monday that fallout from the financial troubles of the founding family of Banco Espirito Santo (BES) could affect the wider economy. With Portugal's hope-strewn GDP growth expectations at only 0.9% for 2014, they do not have much room for disappointment before the nation (whose yields remain near record lows) double- or triple-dips back into recession. Silva concluded, "We cannot ignore that there will be some impact on the real economy," which is odd given every talking-head has explained it is "contained" and "priced-in."

 
Tyler Durden's picture

How Effective Have The Fed's QE Programs Been?





It is quite clear that Bernanke achieved his goal of inflating asset prices by expanding the Federal Reserve's balance sheet by 371.64% since the end of the financial crisis. However, was he as successful in fulfilling his other objectives? The following charts perform the same cost/benefit analysis on real economic health... Did the Fed's monetary intervention programs keep the economy from sliding into a much deeper recession?  Probably. Have the programs been effective in achieving Bernanke's stated goals? Not really.

 

 
Tyler Durden's picture

Saxobank: "Be Warned" Of Delayed Market Reaction To "Escalation Of Global Turmoil"





The escalation of turmoil in the world is yet to play a role for the market, but be warned: everything economic has a delayed reaction of nine to twelve month – whenever there is an action there will be a reaction. If the present state of alertness continues through the summer you can bet on higher energy prices having a serious impact on not only world growth but also on markets. Simply put, Steen Jakobsen concludes, "prepare for less growth, less certainty and more geopolitical risk."

 
Tyler Durden's picture

Russian Sanctions Leading To Economic Contraction... In Germany?





It is no secret that the gist of western thinking has been that sanctions against Russia would pressure its economy enough to force Putin to finally crawl to the negotiating table, tail between his legs, and beg for western forgiveness. Call it the law of unintended consequences striking once again, because while Russia's economy continues to hum along (if only for now, something that can't be said about Ukraine's) and has forced the Kremlin to seek a variety of deals with China to avoid western isolationism, one other country may have been crippled far faster than Russia: Germany.

 
Tyler Durden's picture

Is Yellen Being Misled By Employment Statistics?





The actual state of employment in the U.S. is likely far weaker than the economic statistics currently suggest. If this is indeed the case, it creates a potential for policy mistakes that could have negative consequences to both the economy and the financial markets.

 
Tyler Durden's picture

"Buying The Car Was The Worst Decision I Ever Made" - The Subprime Auto Loan Bubble Bursts





It has been over six months since we first highlighted the growing deterioration in the quality of auto loans and mentioned the 's' word (subprime) as indicative that we learned nothing from the financial crisis. Since then, auto loans (and especially subprime in the last few months) have surged to record highs; and most concerning, recently has seen delinquencies and late payments spike. The reason we provide this background is that, thanks to The NY Times, this story is now hitting the mainstream media as subprime-quality car buyers (new and used) realize the burden they have placed on themselves thanks to exorbitantly high interest rates (and a rapidly depreciating 'asset'). As one car 'owner' exclaimed, "buying the car was the worst decision I have ever made."

 
Tyler Durden's picture

What Disposable Income Looks Like: With And Without Government Handouts





If one looks past headline figures, things are not really getting better. As shown in Figure 1, real disposable income per capita in the U.S. has increased only modestly since the Great Recession. However, all of this increase is due to Government Transfers, not from an improvement in the real economy.

 
Tyler Durden's picture

Hoisington: 30Y Treasury Bonds Are Undervalued





With U.S. rates higher than those of major foreign markets, investors are provided with an additional reason to look favorably on increased investments in the long end of the U.S. treasury market. Additionally, with nominal growth slowing in response to low saving and higher debt we expect that over the next several years U.S. thirty-year bond yields could decline into the range of 1.7% to 2.3%, which is where the thirty-year yields in the Japanese and German economies, respectively, currently stand.

 
Tyler Durden's picture

Euro Tumbles As Italy Slashes Growth Expectations





The Euro is tumbling as Italy slashes economic growth expectations:

*BANK OF ITALY SEES ITALY GDP UP 0.2% THIS YR, 1.3% IN 2015
*BANK OF ITALY SEES DOWNSIDE RISKS FOR ITALY GROWTH EST. THIS YR

The Bank of Italy expected 0.7% growth for 2014 in January and this shift lowers the estimate below consensus. Of course, there's no need to wqory about a triple-dip recession as Italy raised its 2015 estimate from 1.0% to 1.3% - hockey sticks are back...

 
Tyler Durden's picture

Peak Profanity: The Curse Of The Foul-Mouthed CEO





CEO's use of profanity in public changes with the economy. A Bloomberg review of thousands of conference calls recorded in the past 10 years shows CEO cursing spiked after the recession in 2009 and waned as the recovery strengthened. Here's a review of the four most common words of choice: the infamous F-bomb, the scatalogical S-word, the blasphemous G.D., and the derogatory A.H.

 
Tyler Durden's picture

Guest Post: Finding Shelter From The Coming Storms Part 2





More basic suggestions for those who are seeking shelter from the coming storms of global financial crisis and recession (part 1 here).

 
Tyler Durden's picture

Analyzing The Impact Of Fed Rate Hikes On Markets & Economy





There has been much discussion as of late about the end of the current quantitative easing program and the beginning of the Federal Reserve "normalizing" interest rates. The primary assumption is that as interest rates normalize, the financial markets will continue to rise as economic growth strengthens. While this certainly seems like a logical assumption, is it really the case?

 
GoldCore's picture

India Sees Gold Imports Surge 65% In June





The sell off was greeted by Chinese buyers as Chinese premiums edged up to just over $1 an ounce on the Shanghai Gold Exchange (SGE).

Gold price drops this year have led to a marked increase in demand for gold as seen in very large increases in ETF holdings (See chart - Orange is Gold, Purple is absolute change in gold ETF holdings). The smart money in Asia, the West and globally continues to use price dips as an opportunity to allocate to gold.

 
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